CE hits the mainstream in 2006

When Howard Stern is elevated to the position of point man for new media content delivery you know you’re in for an interesting, bumpy ride.

Suddenly media business as usual is anything but usual. Broadcast, Hollywood, music and radio companies are learning that going digital has its ugly side because content can be streamed, copied anywhere, everywhere. And tweens view grabbing, using and sharing this content as a universal right.

Media and content owners finally had a wide range of options to deliver their material – audio and video – to the consumer.

Their challenges are which ones can they make a buck from and which can they protect for their continued revenue stream. Broadcasters and cable guys are trying to get a bigger chunk of the consumer market while satellite people grab more subscribers. While cable companies are fighting back with delivering added services – cable-based phone service and high-speed data – the telcos see IPTV as their salvation in putting a new Hemi in the old car.

With DVRs with big hard drives widely used in Japan, folks in the Americas and Europe are finally understanding that they don’t have to live their lives by the TV schedule and personalize their viewing. They’ve also found out that they can cut a half-hour show to 23 minutes just by cutting out all the ads.

That wasn’t what broadcasters and advertisers had in mind when they first saw the units so now they’ve decided its time to embed products into the shows so you have to look at them!

Tellywood Competitors You

While taking all of the content digital, Tellywood also discovered they had a new competitor – the PC. Digital cameras and camcorders got people taking more photos and personal/family videos that with just a little work were actually fun to watch and share. They not only spend less time watching TV but the PC is finally becoming the personal and home entertainment solution. People are increasingly using their systems to play video games; play music; produce CDs/DVDs; edit photos, slideshows, videos; timeshift shows; and yes download and save music, videos and TV programs.

In fact, personal photo manipulation and video production is growing rapidly because of low-cost; easy-to-use software and budget priced DVD burners and media.

The digital home – or more specifically digital home entertainment – still has a long ways to go before it becomes a reality but it is getting closer. Wired and wireless networks are slowly coming home sparked by sharing everything!

Suddenly people are latching onto the idea of having a centralized storage solution that handles the whole families needs.

Storage – of all types – suddenly got respect at home. And when Jobs saw people renting and downloading content he knew he could beat the masses into a fervor with super cool storage devices and another proprietary platform. Not only did he convince the tweens and boomers his iPods were cool he gave them reasons to newer, cooler, better units even before the batteries had run down.

Recycling Content

As long as he had a pretty secure solution for music rentals, heck he figured why not do a line extension with yesterday’s TV shows and movies. Of course that was yet another iPod!

Like great TV programs, copycat portable devices that could do different things and do a full range of personalized content have been introduced this past year. Suddenly people have gotten the hang of downloading and personalizing content at home and bopping down the street often for nothing.

Since the record industry and Tellywood hadn’t solved the secure content issue, they did the only logical thing they sent out their lawyers to correct the situation and protect their content.

They took on mothers on welfare, grandfathers, even a few people who were deceased. They took the young owners of the music and video congregator web sites to court. They taught the kids a lesson and shut them down until they could figure out how to make money from the new technology.

While Steve has shown that his formula works he hasn’t won over all of the content owners because well some songs are more valuable than others.

The video iPod and IPTV fertilized a fresh crop of video congretators. Unlike the RIAA, Tellywood views them a new, inexpensive channel for renting all of that old content in their vaults. Their challenge let you look but not own.

Rethinking DRM

Bulletproof DRM (Digital Rights Management) software was obviously the solution. While watermarking seems like an acceptable start, members of the MPAA and RIAA know there has to be something better something that it will take a 15-year-old at least a day to break.

Plans were and are still in the works – it was that close – but then the angry mobs with pitchforks and lawsuits took on Sony BMG for their security solution.

Tellywood learned that a gentler DRM might be better for people to download or copy their audio/video content.

Storage Gets Respect

They have to sweat the small stuff now because recording media – flash, HD, CD and DVD – is now the coin of the realm.

Flash-memory and USB flash drives are by far the fastest growing recordable media we have today with sales increasing at lest 25% per year even as manufacturers double unit capacity for the same price. The low power consumption, rugged operation and price to capacity ratio makes flash ideal for use in cellphones, digital cameras, game systems, portable audio/video players and portable business applications.

Small hard drive sales will be big this year with profit margins better than 25 per cent. With perpendicular recording drives now hitting the street the 500GB 3.5-inch drives are the most profitable units with home PCs and household NAS consuming about 15 per cent of the totals. The premium pricing and greatest attention is focused on the sub-2-inch single platter drives (1.8-in, 1-in, 0.85-in). These are destined for the consumer apps – cellphones, portable media players, USB drives, cameras, camcorders – and that market for the HD folks is just emerging.

After a 25 year run, CD media has finally peaked. It has become such a commodity that only people who know better care about brand.

The Long Blue Mile

DVD – especially the future – was where all of the Tellywood and media attention was focused this year. Like two bucks in heat the HD and BD proponents snorted their superiority and sent clouds of press releases flying into the air. Consumers have universally said they’ll watch from the sidelines as the two do battle with no interest in taking sides because they are just getting comfortable with single layer 4.7GB product and are thinking about using 8.5GB discs and for the foreseeable future the price/capacity is a winning combination.

In fact if you look at the WW burner sale numbers blue laser products will look like a tiny shadow of the pillar of sales. Next year the two sides are going to have to begin the long, hard, expensive process of educating the consumer and convincing him/her a little better video content is really a lot better.

Except in Japan, that’s a tough sell. Especially with burners priced under $50, 4.7GB discs at 50 cents and 8.5GB discs still on the expensive side at $2-$2.50. People who want to save content – audio, video, documents – still find the discs the most desirable solution because players are everywhere, capacity is enough for theater quality 2-hour movies and hey it’s cheap!

To prove that people are just getting into DVDR (single layer) production will hit more than 3.6+ billion discs. DL shipments which got off to a slow start late last year gained momentum during the year is still centered on professional content development applications and archive backup (email, healthcare, legal, financial, government). As people download and save more movies, TV shows, music vi

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Jim Love, Chief Content Officer, IT World Canada

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